The plan to cut 1,800 jobs comes after speculation about a cost-saving announcement and a reversal of the life and general insurance merger proved accurate
Insurance giant Aviva has today announced 1,800 job losses over the next three years as it seeks to reduce employee numbers in a cost-saving initiative aimed at saving £300m a year by 2022.
The UK-based firm currently employs 30,000 people across its global operations.
The plans were revealed alongside the splitting of Aviva’s life and general insurance businesses, a measure the firm claimed will “enable stronger accountability and greater management focus”.
The firm says cost-cutting measures will include lower central costs, savings in contractor and consultant spend and a reduction in project expenditure, among other efficiencies.
Aviva chief executive Maurice Tulloch said: “Today is the first step in our plan to make Aviva simpler, more competitive and more commercial.
“Reducing Aviva’s costs is essential to remain competitive and this means tough decisions and job losses, which I do not take lightly.
“We will do all we can to minimise redundancies and support our people through this.”
As well as job losses, Aviva’s life and general insurance businesses will be separated
The plans to split Aviva’s life and general insurance businesses will reverse a 2017 move by former CEO Mark Wilson to merge the two to create what he called a “true customer composite”, intended to sell a range of insurance products to the same consumers.
Mr Tulloch added: “I am also determined to crack Aviva’s complexity, an issue which has held back our performance for too long.
“Today’s changes will begin to reduce complexity, cost, and duplication, enabling Aviva to be better at serving our customers and delivering stronger results for our shareholders.
“The sustainability and security of our dividend is paramount. We are focused on improving our performance to grow capital generation and cash-flow.
“On 20 November, we will host a capital markets day that will update on our future strategy and targets.”
Cost-cutting measures were expected
Several news outlets last week suggested that cost-cutting measures would be introduced, after Mr Tulloch told staff at Aviva’s annual meeting that “our cost to income ratio is higher than it ought to be”.
There was also speculation about the possible split of Aviva’s life and general insurance businesses after the Financial Times heard from observers that it could be an option to achieve the simplified structures Mr Tulloch wishes to achieve.
Potential for Aviva job losses identified in chairman’s review
The appointment of Mr Tulloch on 4 March this year was quickly followed by the release of the firm’s financial report for 2018.
In the report, Aviva chairman Sir Adrian Montague identified cost management among the priorities for the firm, hinting that it could mean staff reductions.
He said: “Having made Aviva stronger, the focus of the next phase is to make Aviva a better company.
“This means re-emphasising the fundamentals – customer service, distribution, product mix and pricing, and managing expenses.
“This will require significant improvements by Aviva. It will also entail choices with respect to resource allocation.”
Further down the review was a section of actionable goals for Aviva, which included the need to “improve customer experience through simplification of customer journeys, digitisation and automation”.